ANNUAL REPORT
NOVEMBER 30, 1999
[GRAPHIC OMITTED]
Mercury
Global
Balanced
Fund
OF MERCURY ASSET
MANAGEMENT FUNDS, INC.
--------------------
M E R C U R Y
ASSET MANAGEMENT
--------------------
<PAGE>
MERCURY MASTER
GLOBAL BALANCED PORTFOLIO
SECTOR REPRESENTATION OF EQUITIES AND
FIXED-INCOME SECURITIES
- --------------------------------------------------------------------------------
As a Percentage of Net Assets as of November 30, 1999
A pie chart depicting portfolio composition according to sector representation
of equities and fixed-income securities for the quarter ended November 30, 1999.
[GRAPHIC OMITTED]
Multi Industry 0.1%
Services 20.3%
Finance 15.6%
Consumer Goods 12.4%
Energy 4.6%
Capital Equipment 16.6%
Materials 2.3%
Government Obligations 24.4%
Cash Equivalent 3.7%
GEOGRAPHIC ASSET MIX
- --------------------------------------------------------------------------------
As a percentage of Net Assets as of November 30, 1999
A pie chart depicting portfolio composition according to regional representation
for the quarter ended November 30, 1999.
[GRAPHIC OMITTED]
North America 50.6%
Europe 30.4%
Pacific Basin/Asia 19.0%
November 30, 1999 2 Mercury Global Balanced Fund
<PAGE>
DEAR SHAREHOLDER
We are pleased to provide you with this first annual report. For the quarter
ended November 30, 1999, Mercury Global Balanced Fund's Class I, Class A, Class
B and Class C Shares had total returns of +8.11%, +8.02%, +7.84% and +7.84%,
respectively. (Fund results shown do not reflect sales charges and would be
lower if sales charges were included. Complete performance information can be
found on pages 7-9 of this report to shareholders.)
Fiscal Year in Review
Since the Fund's inception on April 30, 1999 through November 30, 1999, Mercury
Global Balanced Fund's Class I, Class A, Class B and Class C Shares had total
returns of +8.00%, +7.80%, +7.30% and +7.30%, respectively. This compares with a
total return of +4.23% over the same period for the Fund's composite benchmark
index, which comprises 60% of the unmanaged Morgan Stanley Capital International
World (MSCI World) Index and 40% of the Salomon Smith Barney World Government
Bond Index.
The predominant sources of our outperformance were the Portfolio's
underweighting of bonds in favor of equities, our focus on key growth sectors
such as technology infrastructure and telecommunications, and individual stock
selection.
The MSCI World Index outperformed the Salomon Smith Barney World Government Bond
Index over the fiscal period as global consolidation, robust liquidity and
corporate earnings growth underpinned equities. During the same period, the
Federal Reserve Board's reversal of its 1998 interest rate cuts and a lingering
concern that synchronized economic growth will generate inflationary pressures
have left global bond yields largely unchanged from their levels at the end of
April, following a heavy sell off in May and June and subsequent recovery in the
third quarter of 1999.
During the fiscal period, we maintained an overweight position in the technology
and telecommunication sectors, which have been among the strongest of the global
sectors. October and November provided significant growth during a period in
which equity market increases have tended to be unusually polarized. In
particular, JDS Uniphase Corporation, a leading provider of fiber optic cabling,
Nokia Oyj, the Finnish mobile telephone manufacturer, and Mannesmann AG, the
German telecommunications company, have added significantly to the Fund's
relative and absolute performance.
Economic and Market Review
Since the Fund's inception, global economic growth has continued to expand, with
US growth in particular running at a high rate. US equities have spent the
period in a volatile trading range, as the focus has shifted toward the extent
of US interest rate tightenings and the effect of the Year 2000 watershed. A
technology driven rally in November, in which the NASDAQ outperformed the
Standard & Poor's 500 Index by over 11% left markets at the top of the range.
Continued strong growth in the economy underpinned another good season of
corporate results, but also gen erated nervousness about the emergence of
inflationary pressures that might initiate a downturn in the cycle. The Federal
Reserve Board announced that it was moving to a tightening bias and raised
interest rates accordingly; although the central bank's stance is currently
neutral, interest
November 30, 1999 3 Mercury Global Balanced Fund
<PAGE>
rate concerns are likely to affect equity markets going forward. In particular,
the long duration sectors that have performed so well over the year should
remain in volatile territory until the future direction of interest rates
becomes clearer. As such, although we continue to focus on high-quality growth
stocks, we are currently unwilling to increase our weighting in this sector.
The Japanese market has enjoyed a period of growth over the fiscal year, with US
dollar returns boosted by the strength of the yen. The government's approval of
a multi-trillion yen fiscal stimulus package was received well by the stock
market, although the consequent need to issue even more bonds put pressure on
the bond market. Good news on corporate restructuring was a further feature with
an abundance of merger and acquisition activity, including an unusual spate of
permitted foreign acquisitions, notably Renault's link up with Nissan Motor Co.,
and Goodyear Tire & Rubber Company's purchase of Sumitomo Corporation's rubber
foreign operations. Though corporate earnings results were not especially
robust, many announcements were accompanied by pledges to reduce costs and
withdraw from unprofitable businesses. The second quarter of 1999 saw the
technical end of Japan's recession with quarter-on-quarter growth of 1.9%, and
the Nikkei 225 surged ahead in June, rising 8.8%. This enabled the Japanese
stock market to provide one of the best returns from amongst the major world
markets during the life of the Fund. However, this also sent the yen soaring
against the US dollar and took some of the gloss off a good year as concern
mounted over the prospects for exporters. We returned the Portfolio to a more
neutral stance for the region within the equity component, after being
overweight for much of the period.
Although European markets overall showed gains over the fiscal period, they
lagged conspicuously behind the other major world markets, reflecting the
sluggishness of recovery in many parts of the region. From the Fund's inception
until late October, European markets were largely range bound, with US dollar
returns affected further by the weakness of the euro. Corporate activity
regularly dominated business headlines, with European merger and acquisition
activity outpacing that of the United States in the third quarter. Cross-border
transactions broke new records, and domestic consolidation was encouraged by
governments in the pursuit of national champions, notably in the French banking
and retail sectors with the Carrefour SA--Promodes SA and Banque Nationale de
Paris--Paribas SA merger announcements. Until November, stock markets performed
indifferently, with the emphasis shifting to future interest rate rises both in
Europe and in the United States. As global growth continued to pick up and
Germany in particular began to grow, bond yields rose, with the German ten-year
government bond yield topping 5.1% by the end of the period. As a result, many
high-multiple stocks underperformed over the period, especially pharmaceuticals
and financial stocks. In line with their global peers, European
telecommunications rose sharply in November, especially those positioned
strongly in wireless communications; a merger battle between three of the
region's key players--Vodafone Group PLC, Mannesmann AG and Orange PLC--also
added strength to valuations. Going forward, we expect continuing consolidation
to remain a major theme of the region.
The Pacific region stock markets continued the rebound that began in the first
quarter of 1999. A recovery in the value of many Asian currencies early in the
year allowed a number of authorities to cut interest rates, and some of the
resulting liquidity was channelled
November 30, 1999 4 Mercury Global Balanced Fund
<PAGE>
back into stock markets. The Australian market rose on the back of good domestic
economic growth, and resource stocks there performed well as oil and gold
bounced back. Hong Kong and Singapore finished the period on an encouraging note
as strong export orders saw an upward revision of gross domestic product
estimates, while China cut interest rates by 100 basis points (1.00%),
signifying a willingness to reflate the economy through monetary policy.
Portfolio Activity
In establishing the equity component of the Portfolio, we invested in a broad
portfolio of some 140 stocks from 15 countries and across global sectors. We
focused on the growth potential of wireless data traffic and established active
positions in a number of global telecommunications and telecommunication-related
stocks, notably Nippon Telegraph & Telephone Corporation, Sprint Corp.,
Mannesmann, Nokia and JDS Uniphase. Despite their already impressive growth,
these companies appear well placed to prosper over the long term. By the end of
November, the Portfolio had reverted to a more neutral stance in terms of sector
allocation.
Within equities, major additions to the Portfolio included Warner-Lambert
Company, the US pharmaceutical company. The continuing strength of the company's
drug pipe-line, notably its cholesterol lowering drug Lipitor, point to solid
sales growth and the highest-quality earnings in its sector. Share price rises
both before and after its takeover battle with American Home Products
Corporation and Pfizer Inc. boosted returns. Other recent additions to the
Portfolio included VeriSign, Inc., a company that provides encryption technology
for the Internet, and Citrix Systems, Inc., a company that provides Windows
software and other applications in thin client systems (this system centralizes
processing power and overcomes the problem of excess and underutilized
processing power in individual desktop computers).
The fixed-income portion of the Portfolio remained underweight in Japanese bonds
throughout the period, given the possible impact of high levels of fiscal
stimuli and the size of issuance required to fund them. Over the fiscal period,
the Portfolio moved from an overweighted to an underweighted position in North
American and European bonds.
Investment Outlook
We remain positive regarding the outlook for international equities given strong
economic growth and an absence of inflationary pressures. Although we expect
markets to continue to be concerned over the potential for higher inflation and
therefore higher interest rates, the sentiment of investors is positive and fund
flows into international equities are running at high levels. We feel that
concerns over inflation may be slightly overstated, especially given the
disinflationary impact of high levels of international capacity and supply.
Over the long-term, global bond yields should trend downward in response to
diminished inflationary pressure, but strong domestic demand and increasing
investment in the United States in 2000 will continue to put upward pressure on
fixed-income yields. Until the extent and rate of the Federal Reserve Board's
tightening cycle becomes clearer, we expect global bonds to underperform
equities.
November 30, 1999 5 Mercury Global Balanced Fund
<PAGE>
Economic recovery in Europe does appear to be gaining momentum, which has led to
steadily rising earnings expectations. Corporate activity remains intense, and
in the Eurozone we believe that increased focus on shareholder value will
continue to support equities.
In Conclusion
We thank you for your investment in Mercury Global Balanced Fund, and we look
forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Jeffrey Peek /s/ Gary Lowe /s/ Rupert Watson
Jeffrey Peek Gary Lowe Rupert Watson
President Portfolio Manager Portfolio Manager
Equity Investments Fixed-Income Investments
January 11, 2000
- --------------------------------------------------------------------------------
Effective in November 1999, Rupert Watson assumed the day-to-day
responsibilities as the senior investment professional for the bond portion of
Mercury Global Balanced Fund. Mr. Watson has been employed as an investment
professional by the Investment Adviser or its Mercury affiliates since 1998 and
was employed by the Bank of England from 1994 to 1997.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To reduce shareholder expenses, Mercury Global Balanced Fund will no longer be
printing and mailing quarterly reports to shareholders. We will continue to
provide you with reports on a semi-annual and annual basis.
- --------------------------------------------------------------------------------
November 30, 1999 6 Mercury Global Balanced Fund
<PAGE>
FUND PERFORMANCE DATA
ABOUT FUND PERFORMANCE
The Fund offers four classes of shares, each with its own sales charge and
expense structure allowing you to invest in the way that best suits your needs.
CLASS I SHARES incur a maximum initial sales charge of 5.25% and bear no ongoing
distribution and account maintenance fees. Class I shares are available only to
eligible investors.
CLASS A SHARES incur a maximum initial sales charge of 5.25% and an account
maintenance fee of 0.25% (but no distribution fee).
CLASS B SHARES are subject to a maximum contingent deferred sales charge of 4%
if redeemed during the first two years, decreasing to 3% for each of the next
two years and decreasing 1% each year thereafter to 0% after the sixth year. In
addition, Class B shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. These shares automatically convert to Class A
shares after approximately 8 years.
CLASS C SHARES are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. In addition, Class C shares may be subject to a 1%
contingent deferred sales charge if redeemed within one year after purchase.
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Recent Performance Results" and "Aggregate
Total Return" tables assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each class of
shares will vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class, which are
deducted from the income available to be paid to shareholders.
RECENT PERFORMANCE RESULTS*
================================================================================
3 Month Since Inception
As of November 30, 1999 Total Return Total Return
================================================================================
Class I +8.11% +8.00%
- --------------------------------------------------------------------------------
Class A +8.02 +7.80
- --------------------------------------------------------------------------------
Class B +7.84 +7.30
- --------------------------------------------------------------------------------
Class C +7.84 +7.30
- --------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges. Results shown would
be lower if sales charges were included. Total investment returns are
based on changes in the Fund's net asset values for the periods shown, and
assume reinvestment of all dividends and capital gains at net asset value
on the ex-dividend date. The Fund's inception date is 4/30/99.
November 30, 1999 7 Mercury Global Balanced Fund
<PAGE>
FUND PERFORMANCE DATA (CONTINUED)
TOTAL RETURN BASED ON A $10,000 INVESTMENT
================================================================================
Class I & Class A Shares
A line graph depicting the growth of an investment in the Portfolio's Class I &
Class A Shares compared to growth of an investment in the Morgan Stanley Capital
International World Index, Salomon Smith Barney World Government Bond Index and
the Composite Index.
Beginning and ending values are:
4/30/99** 11/99
Mercury Global Balanced Fund+--
Class I Shares* $ 9,475 $10,223
Class A Shares* $ 9,475 $10,214
MSCI International
World Index++ $10,000 $10,739
Salomon Smith Barney World
Government Bond Index (Hedged)+++ $10,000 $ 9,945
Composite Index++++ $10,000 $10,423
Class B & Class C Shares
A line graph depicting the growth of an investment in the Portfolio's Class B &
Class C Shares compared to growth of an investment in the Morgan Stanley Capital
International World Index, Salomon Smith Barney World Government Bond Index and
the Composite Index.
Beginning and ending values are:
4/30/99** 11/99
Mercury Global Balanced Fund+--
Class B Shares* $10,000 $10,330
Class C Shares* $10,000 $10,630
MSCI International
World Index++ $10,000 $10,739
Salomon Smith Barney World
Government Bond Index (Hedged)+++ $10,000 $ 9,945
Composite Index++++ $10,000 $10,423
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ The Fund invests all of its assets in Mercury Master Global Balanced
Portfolio of Mercury Asset Management Master Trust. The Portfolio invests
in a mix of stocks and high-quality bonds of issuers located in the United
States and other developed countries.
++ This unmanaged market-capitalization weighted Index is comprised of a
representative sampling of stocks of large-, medium- and
small-capitalization companies in 22 countries, including the United
States.
+++ This unmanaged market-capitalization weighted Index tracks the performance
of the 18 government bond markets of Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands,
Portugal, Spain, Sweden, Switzerland, the United Kingdom and the United
States.
++++ Composite Index is comprised of 60% of Morgan Stanley Capital
International World Index and 40% of Salomon Smith Barney World Government
Bond Index (Hedged).
Past performance is not indicative of future performance.
November 30, 1999 8 Mercury Global Balanced Fund
<PAGE>
FUND PERFORMANCE DATA (CONCLUDED)
AGGREGATE TOTAL RETURN
================================================================================
% Return % Return
Without Sales With Sales
Class I Shares *Charge Charge**
================================================================================
Inception (4/30/99)
through 9/30/99 +0.30% -4.97%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without With
Class B Shares* CDSC CDSC**
================================================================================
Inception (4/30/99)
through 9/30/99 -0.10% -4.10%
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
6 years.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without Sales With Sales
Class A Shares *Charge Charge**
================================================================================
Inception (4/30/99)
through 9/30/99 +0.20% -5.06%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without With
Class C Shares* CDSC CDSC**
================================================================================
Inception (4/30/99)
through 9/30/99 -0.10% -1.10%
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
November 30, 1999 9 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of November 30, 1999
- --------------------------------------------------------------------------------
MERCURY GLOBAL BALANCED FUND
================================================================================
Assets:
Investment in Mercury Master Global Balanced Portfolio, at
value (identified cost--$442,853,200) $ 481,039,945
Other assets 155,708
-------------
Total assets 481,195,653
-------------
- --------------------------------------------------------------------------------
Liabilities:
Payable to distributor 377,783
Payable to administrator 10,688
Accrued expenses and other liabilities 657,848
-------------
Total liabilities 1,046,319
-------------
- --------------------------------------------------------------------------------
Net Assets:
Net assets $ 480,149,334
=============
- --------------------------------------------------------------------------------
Net Assets Consist of:
Class I Shares of Common Stock, $.0001 par value, 100,000,000
shares authorized $ 124
Class A Shares of Common Stock, $.0001 par value, 100,000,000
shares authorized 403
Class B Shares of Common Stock, $.0001 par value, 100,000,000
shares authorized 2,584
Class C Shares of Common Stock, $.0001 par value, 100,000,000
shares authorized 1,361
Paid-in capital in excess of par 446,288,458
Undistributed investment income--net 1,649,867
Accumulated realized capital losses on investments from the
Portfolio--net (5,980,208)
Unrealized appreciation on investments and foreign currency
transactions from the Portfolio--net 38,186,745
-------------
Net assets $ 480,149,334
=============
- --------------------------------------------------------------------------------
Net Asset Value:
Class I--Based on net assets of $13,333,484 and 1,235,013
shares outstanding $ 10.80
=============
Class A--Based on net assets of $43,441,957 and 4,029,794
shares outstanding $ 10.78
=============
Class B--Based on net assets of $277,295,926 and 25,839,845
shares outstanding $ 10.73
=============
Class C--Based on net assets of $146,077,967 and 13,610,699
shares outstanding $ 10.73
=============
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See Notes to Financial Statements.
November 30, 1999 10 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Period April 30, 1999+ to November 30, 1999
- --------------------------------------------------------------------------------
MERCURY GLOBAL BALANCED FUND
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Investment income allocated from the Portfolio (net of
$179,248 foreign withholding tax) $ 7,365,911
Expenses allocated from the Portfolio (1,846,311)
------------
Net investment income from the Portfolio 5,519,600
------------
- -------------------------------------------------------------------------------------------
Expenses:
Account maintenance and distribution fees--Class B $ 1,522,930
Account maintenance and distribution fees--Class C 774,945
Administration fee 525,546
Transfer agent fees--Class B 175,520
Transfer agent fees--Class C 93,374
Offering costs 73,610
Printing and shareholder reports 62,967
Account maintenance fees--Class A 62,638
Registration fees 52,097
Professional fees 48,110
Transfer agent fees--Class A 25,428
Accounting services 11,674
Transfer agent fees--Class I 8,068
Other 285
-----------
Total expenses 3,437,192
------------
Investment income--net 2,082,408
------------
- -------------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) from the Portfolio--Net:
Realized loss from the Portfolio on:
Investments--net (5,980,208)
Foreign currency transactions--net (512,976) (6,493,184)
-----------
Unrealized appreciation on investments and foreign currency
transactions from the Portfolio--net 38,186,745
------------
Net realized and unrealized gain on investments and foreign
currency transactions from the Portfolio 31,693,561
------------
Net Increase in Net Assets Resulting from Operations $ 33,775,969
============
- -------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
November 30, 1999 11 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS
For the Period April 30, 1999+ to November 30, 1999
- --------------------------------------------------------------------------------
MERCURY GLOBAL BALANCED FUND
================================================================================
Increase (Decrease) in Net Assets:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Operations:
Investment income--net $ 2,082,408
Realized loss on investments and foreign currency transactions from the
Portfolio--net (6,493,184)
Unrealized appreciation on investments and foreign currency transactions
from the Portfolio--net 38,186,745
-------------
Net increase in net assets resulting from operations 33,775,969
-------------
- -----------------------------------------------------------------------------------------
Capital Share Transactions:
Net increase in net assets derived from capital share transactions 446,273,365
-------------
- -----------------------------------------------------------------------------------------
Net Assets:
Total increase in net assets 480,049,334
Beginning of period 100,000
-------------
End of period* $ 480,149,334
=============
- -----------------------------------------------------------------------------------------
* Undistributed investment income--net $ 1,649,867
+ Commencement of operations. =============
</TABLE>
See Notes to Financial Statements.
November 30, 1999 12 Mercury Global Balanced Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY GLOBAL BALANCED FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
For the Period April 30, 1999+ to November 30, 1999
----------------------------------------------------
Increase (Decrease) in Net Asset Value: Class I Class A Class B Class C
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
----------------------------------------------------
Investment income--net .11 .09 .04 .04
Realized and unrealized gain on
investments and foreign currency
transactions from the Portfolio--net .69 .69 .69 .69
----------------------------------------------------
Total from investment operations .80 .78 .73 .73
----------------------------------------------------
Net asset value, end of period $ 10.80 $ 10.78 $ 10.73 $ 10.73
====================================================
- ----------------------------------------------------------------------------------------------
Total Investment Return:**
Based on net asset value per share 8.00%+++ 7.80%+++ 7.30%+++ 7.30%+++
====================================================
- ----------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses++ 1.10%* 1.35%* 2.12%* 2.10%*
====================================================
Investment income--net 1.73%* 1.47%* .68%* .70%*
====================================================
- ----------------------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 13,333 $ 43,442 $277,296 $146,078
====================================================
- ----------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
++ Includes the Fund's share of the Portfolio's allocated expenses.
+++ Aggregate total investment return.
See Notes to Financial Statements.
November 30, 1999 13 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY GLOBAL BALANCED FUND
================================================================================
1 Significant Accounting Policies:
Mercury Global Balanced Fund (the "Fund") is part of Mercury Asset
Management Funds, Inc. (the "Corporation"). The Fund is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund's financial statements are prepared in
accordance with generally accepted accounting principles, which may
require the use of management accruals and estimates. The Fund seeks to
achieve its investment objective by investing all of its assets in the
Mercury Master Global Balanced Portfolio (the "Portfolio") of Mercury
Asset Management Master Trust (the "Trust"), which has the same investment
objective as the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the
Portfolio. The performance of the Fund is directly affected by the
performance of the Portfolio. The financial statements of the Portfolio,
including the Schedule of Investments, are included elsewhere in this
report and should be read in conjunction with the Fund's financial
statements. Prior to commencement of operations on April 30, 1999, the
Fund had no operations other than those relating to organizational matters
and the issuance of 10,000 capital shares of the Fund on April 21, 1999 to
Mercury Asset Management International Ltd. ("Mercury International") for
$100,000. The Fund offers four classes of shares. Class I and Class A
Shares are sold with a front-end sales charge. Class B and Class C Shares
may be subject to a contingent deferred sales charge. All classes of
shares have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class A, Class B and Class C
Shares bear certain expenses related to the account maintenance of such
shares, and Class B and Class C Shares also bear certain expenses related
to the distribution of such shares. Each class has exclusive voting rights
with respect to matters relating to its account maintenance and
distribution expenditures (except that Class B Shares have certain voting
rights with respect to Class A distribution expenditures). The following
is a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Valuation of securities is discussed in Note
1a of the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.
(b) Income--The Fund's net investment income consists of the Fund's pro
rata share of the net investment income of the Portfolio, less all actual
and accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
(c) Income taxes--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to dis tribute substantially all of its taxable income to
shareholders. Therefore, no Federal income tax provision is required.
Under the applicable foreign tax law, withholding taxes may be imposed on
interest, dividends and capital gains at various rates.
November 30, 1999 14 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(d) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(e) Dividends and distributions--Dividends and distributions paid by the
Fund are recorded on the ex-dividend dates.
(f) Investment transactions--Investment transactions are accounted for on
a trade date basis.
(g) Reclassification--Generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, current
year's permanent book/tax differences of $80,435 have been reclassified
between paid-in capital in excess of par and net investment income and
$512,976 has been reclassified between undistributed net investment income
and accumulated net realized capital losses. These reclassifications have
no effect on net assets or net asset values per share.
2 Transactions with Affiliates:
The Corporation has entered into an Administration Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is Princeton
Services, Inc. ("PSI"), a wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. ("ML & Co."), which is the limited partner. The Fund pays a monthly
fee at an annual rate of .20% of the Fund's average daily net assets for
the performance of administrative services (other than investment advice
and related portfolio activities) necessary for the operation of the Fund.
The Corporation has also entered into a Distribution Agreement and
Distribution Plans with Mercury Funds Distributor ("MFD" or the
"Distributor"), a division of Princeton Funds Distributor, Inc. ("PFD"), a
wholly-owned subsidiary of Merrill Lynch Group, Inc. Pursuant to the
Distribution Plans adopted by the Corporation in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the
Distributor ongoing account maintenance and distribution fees. The fees
are accrued daily and paid monthly at annual rates based upon the average
daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
==========================================================================
Class A .25% --
--------------------------------------------------------------------------
Class B .25% .75%
--------------------------------------------------------------------------
Class C .25% .75%
--------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., and
selected dealers also provide account maintenance and distribution
services to the Fund. The ongoing account maintenance fee compensates the
Distributor, MLPF&S and selected dealers for providing account maintenance
services to Class A, Class B and Class C shareholders. The ongoing
distribution fee compensates the Distributor, MLPF&S and selected
November 30, 1999 15 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
dealers for providing shareholder and distribution-related services to
Class B and Class C shareholders.
For the period April 30, 1999 to November 30, 1999, MFD earned
underwriting discounts and MLPF&S earned dealer concessions on sales of
the Fund's Class A Shares as follows:
MFD MLPF&S
==========================================================================
Class A $ 10,322 $2,017,017
--------------------------------------------------------------------------
For the period April 30, 1999 to November 30, 1999, MLPF&S received
contingent deferred sales charges of $330,505 and $61,376 relating to
transactions in Class B and Class C Shares, respectively.
Financial Data Services, Inc. ("FDS"), an indirect wholly-owned subsidiary
of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Corporation are officers and/or
directors or trustees of the Trust, Mercury International, FAM, PSI, PFD,
FDS, and/or ML & Co.
3 Investments:
Increases and decreases in the Fund's investment in the Portfolio for the
period April 30, 1999 to November 30, 1999 were $454,549,093 and
$11,010,246, respectively.
4 Capital Share Transactions:
Net increase in net assets derived from capital share transactions was
$446,273,365 for the period April 30, 1999 to November 30, 1999.
Transactions in capital shares for each class were as follows:
Class I Shares for the Period April 30, 1999+
to November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 1,616,297 $ 16,138,828
Shares redeemed (383,784) (3,878,805)
--------------------------
Net increase 1,232,513 $ 12,260,023
==========================
--------------------------------------------------------------------------
+ Prior to April 30, 1999 (commencement of operations), the Fund issued
2,500 shares to Mercury International for $25,000.
November 30, 1999 16 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
Class A Shares for the Period April 30, 1999+
to November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 4,650,095 $ 46,464,008
Shares redeemed (622,801) (6,280,604)
---------------------------
Net increase 4,027,294 $ 40,183,404
===========================
--------------------------------------------------------------------------
+ Prior to April 30, 1999 (commencement of operations), the Fund issued
2,500 shares to Mercury International for $25,000.
Class B Shares for the Period April 30, 1999+
to November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 27,272,894 $272,311,072
Shares redeemed (1,435,549) (14,441,505)
----------------------------
Net increase 25,837,345 $257,869,567
============================
--------------------------------------------------------------------------
+ Prior to April 30, 1999 (commencement of operations), the Fund issued
2,500 shares to Mercury International for $25,000.
Class C Shares for the Period April 30, 1999+
to November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 14,563,255 $145,538,987
Shares redeemed (955,056) (9,578,616)
----------------------------
Net increase 13,608,199 $135,960,371
============================
--------------------------------------------------------------------------
+ Prior to April 30, 1999 (commencement of operations), the Fund issued
2,500 shares to Mercury International for $25,000.
5 Subsequent Event:
On December 17, 1999, the Fund's Board of Directors declared an ordinary
income dividend in the amount of $.200738 per Class I Share, $.185054 per
Class A Share, $.140801 per Class B Share and $.142783 per Class C Share,
payable on December 23, 1999 to shareholders of record as of December 17,
1999.
November 30, 1999 17 Mercury Global Balanced Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
MERCURY GLOBAL BALANCED FUND
================================================================================
The Board of Directors and Shareholders,
Mercury Global Balanced Fund (One of the Series constituting
Mercury Asset Management Funds, Inc.):
We have audited the accompanying statement of assets and liabilities of Mercury
Global Balanced Fund as of November 30, 1999, the related statements of
operations and changes in net assets, and the financial highlights for the
period April 30, 1999 (commencement of operations) to November 30, 1999. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the financial highlights
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Mercury Global
Balanced Fund as of November 30, 1999, the results of its operations, the
changes in its net assets, and the financial highlights for the period April 30,
1999 (commencement of operations) to November 30, 1999 in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 18, 2000
November 30, 1999 18 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
In US Dollars
---------------------
Shares Held/ Percent of
Industries Face Amount Investments Value Net Assets
- ---------------------------------------------------------------------------------------------
EUROPE
=============================================================================================
<S> <C> <C> <C> <C>
Belgium
Utilities-- 1,515 Electrabel SA $ 483,216 0.1%
Electric & Gas
- ---------------------------------------------------------------------------------------------
Total Investments in Belgium 483,216 0.1
- ---------------------------------------------------------------------------------------------
Denmark
Foreign Dkr36,200,000 Kingdom of Denmark, 6% due
Government 11/15/2009 5,068,593 1.0
Obligations
- ---------------------------------------------------------------------------------------------
Total Investments in Denmark 5,068,593 1.0
- ---------------------------------------------------------------------------------------------
Finland
Electrical & 38,628 Nokia Oyj 5,468,028 1.1
Electronics
- ---------------------------------------------------------------------------------------------
Total Investments in Finland 5,468,028 1.1
- ---------------------------------------------------------------------------------------------
France
Banking 18,797 Banque Nationale de Paris (BNP) 1,722,159 0.4
- ---------------------------------------------------------------------------------------------
Business/ 21,031 Vivendi 1,672,747 0.3
Public Services
- ---------------------------------------------------------------------------------------------
Energy Sources 19,095 Total Fina SA 'B' 2,539,602 0.5
- ---------------------------------------------------------------------------------------------
Foreign (euro)10,450,000 French Btan, 4.50% due 7/12/2002 10,586,680 2.2
Government (euro) 5,500,000 French OAT, 5.25% due 4/25/2008 5,584,363 1.2
Obligations ---------------------
16,171,043 3.4
- ---------------------------------------------------------------------------------------------
Insurance 14,835 Axa 1,999,914 0.4
- ---------------------------------------------------------------------------------------------
Leisure/Tourism 6,744 Accor SA 1,530,434 0.3
- ---------------------------------------------------------------------------------------------
Merchandising 8,239 Carrefour SA 1,435,039 0.3
11,033 Pinault-Printemps-Redoute SA 2,299,361 0.5
---------------------
3,734,400 0.8
- ---------------------------------------------------------------------------------------------
Total Investments in France 29,370,299 6.1
- ---------------------------------------------------------------------------------------------
Germany
Automobiles 15,883 DaimlerChrysler AG 1,080,992 0.2
- ---------------------------------------------------------------------------------------------
Banking (euro) 3,100,000 Deutsche Ausgleichsbank, 6.50%
due 9/15/2004 3,079,850 0.6
21,456 HypoVereinsbank 1,330,677 0.3
---------------------
4,410,527 0.9
- ---------------------------------------------------------------------------------------------
Chemicals 26,728 Bayer AG 1,130,210 0.3
- ---------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 19 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------
Shares Held/ Percent of
Industries Face Amount Investments Value Net Assets
- --------------------------------------------------------------------------------------------------
EUROPE (continued)
==================================================================================================
<S> <C> <C> <C> <C>
Germany (concluded)
Electrical & 29,181 Siemens AG $ 2,940,881 0.6%
Electronics
- --------------------------------------------------------------------------------------------------
Foreign Bundesobligation:
Government (euro)10,500,000 5% due 8/20/2001 10,747,995 2.2
Obligations (euro) 7,800,000 3.25% due 2/17/2004 7,473,353 1.6
Bundesrepublic Deutschland:
(euro) 2,600,000 6.75% due 7/15/2004 2,837,568 0.6
(euro) 1,800,000 6.875% due 5/12/2005 13,031,566 2.7
------------------------
34,090,482 7.1
- --------------------------------------------------------------------------------------------------
Insurance 5,918 Allianz AG (Registered Shares) 1,732,359 0.4
- --------------------------------------------------------------------------------------------------
Telecommunica- 49,078 Mannesmann AG 10,198,581 2.1
tions
- --------------------------------------------------------------------------------------------------
Transportation-- 48,680 Deutsche Lufthansa AG
Airlines (Registered Shares) 1,071,381 0.2
- --------------------------------------------------------------------------------------------------
Total Investments in Germany 56,655,413 11.8
- --------------------------------------------------------------------------------------------------
Italy
Banking 437,497 Unicredito Italiano SpA 2,039,385 0.4
- --------------------------------------------------------------------------------------------------
Total Investments in Italy 2,039,385 0.4
- --------------------------------------------------------------------------------------------------
Netherlands
Beverages & 19,749 Heineken NV 954,398 0.2
Tobacco
- --------------------------------------------------------------------------------------------------
Broadcasting & 83,130 Elsevier NV 818,540 0.2
Publishing 38,849 Wolters Kluwer NV 'A' 1,171,440 0.2
------------------------
1,989,980 0.4
- --------------------------------------------------------------------------------------------------
Chemicals 25,031 Akzo Nobel NV 1,071,051 0.2
- --------------------------------------------------------------------------------------------------
Electrical & 15,006 Koninklijke (Royal) Philips
Electronics Electronics NV 1,825,807 0.4
- --------------------------------------------------------------------------------------------------
Energy Sources 36,571 Royal Dutch Petroleum Company 2,151,374 0.5
- --------------------------------------------------------------------------------------------------
Food & 30,653 Unilever NV 'A' 1,688,121 0.4
Household
Products
- --------------------------------------------------------------------------------------------------
Foreign Netherlands Government Bonds:
Government (euro) 3,075,000 3% due 2/15/2002 3,017,085 0.6
Obligations (euro) 6,500,000 3.75% due 7/15/2009 5,791,303 1.2
------------------------
8,808,388 1.8
- --------------------------------------------------------------------------------------------------
Insurance 38,255 ING Groep NV 2,151,070 0.4
- --------------------------------------------------------------------------------------------------
Total Investments in the Netherlands 20,640,189 4.3
- --------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 20 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------
Shares Held/ Percent of
Industries Face Amount Investments Value Net Assets
- --------------------------------------------------------------------------------------------------
EUROPE (continued)
==================================================================================================
<S> <C> <C> <C> <C>
Spain
Banking 167,396 Banco Santander Central
Hispano, SA $ 1,838,709 0.4%
- --------------------------------------------------------------------------------------------------
Foreign (euro) 7,400,000 Bonos Y Obligation Del Estado,
Government 4.50% due 7/30/2004 7,343,192 1.5
Obligations
- --------------------------------------------------------------------------------------------------
Telecommuni- 122,757 + Telefonica SA 2,555,877 0.5
cations 2,742 + Telefonica SA (New) 52,535 0.0
------------------------
2,608,412 0.5
- --------------------------------------------------------------------------------------------------
Total Investments in Spain 11,790,313 2.4
- --------------------------------------------------------------------------------------------------
Sweden
Appliances & 44,176 Electrolux AB 'B' 862,934 0.2
Household Durables
- --------------------------------------------------------------------------------------------------
Multi-Industry 27,319 Investor AB 'B' 368,090 0.1
- --------------------------------------------------------------------------------------------------
Construction & 24,442 Skandia Forsakrings AB 585,308 0.1
Housing
- --------------------------------------------------------------------------------------------------
Total Investments in Sweden 1,816,332 0.4
- --------------------------------------------------------------------------------------------------
Switzerland
Banking 6,400 Credit Suisse Group
(Registered Shares) 1,197,033 0.3
- --------------------------------------------------------------------------------------------------
Business/ 2,187 Adecco SA (Registered Shares) 1,398,327 0.3
Public Services
- --------------------------------------------------------------------------------------------------
Food & Household 844 Nestle SA (Registered Shares) 1,518,627 0.3
Products
- --------------------------------------------------------------------------------------------------
Health & 626 Novartis AG (Registered Shares) 975,641 0.2
Personal Care 83 Roche Holding AG 1,001,886 0.2
------------------------
1,977,527 0.4
- --------------------------------------------------------------------------------------------------
Total Investments in Switzerland 6,091,514 1.3
- --------------------------------------------------------------------------------------------------
United Kingdom
Aerospace & 186,220 British Aerospace PLC 1,063,423 0.2
Military Technology
- --------------------------------------------------------------------------------------------------
Banking 69,058 Barclays PLC 1,989,670 0.4
77,091 HSBC Holdings PLC 993,365 0.2
135,702 Lloyds TSB Group PLC 1,733,484 0.4
------------------------
4,716,519 1.0
- --------------------------------------------------------------------------------------------------
Energy Sources 312,160 BP Amoco PLC 3,170,198 0.7
- --------------------------------------------------------------------------------------------------
Food & 48,343 Unilever PLC 352,442 0.1
Household Products
- --------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 21 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-------------------------
Shares Held/ Percent of
Industries Face Amount Investments Value Net Assets
- --------------------------------------------------------------------------------------------------
EUROPE (concluded)
==================================================================================================
<S> <C> <C> <C> <C>
United Kingdom (concluded)
Foreign (pound) 3,050,000 United Kingdom Gilt, 6.75% due
Government 11/26/2004 $ 5,014,389 1.0%
Obligations
- --------------------------------------------------------------------------------------------------
Health & 45,558 AstraZeneca Group PLC 2,029,088 0.4
Personal Care 110,966 Glaxo Wellcome PLC 3,317,218 0.7
115,656 SmithKline Beecham PLC 1,542,768 0.3
-------------------------
6,889,074 1.4
- --------------------------------------------------------------------------------------------------
Insurance 96,371 Allied Zurich PLC 1,164,331 0.2
81,886 CGU PLC 1,238,288 0.3
-------------------------
2,402,619 0.5
- --------------------------------------------------------------------------------------------------
Leisure/Tourism 90,062 Granada Group PLC 738,308 0.2
- --------------------------------------------------------------------------------------------------
Merchandising 50,146 Dixons Group PLC 1,090,374 0.2
34,967 Kingfisher PLC 322,274 0.1
546,956 Tesco PLC 1,475,743 0.3
-------------------------
2,888,391 0.6
- --------------------------------------------------------------------------------------------------
Metals/Non-Ferrous 34,768 Rio Tinto PLC (Registered Shares 680,728 0.1
- --------------------------------------------------------------------------------------------------
Telecommuni- 163,690 British Telecommunications PLC 3,279,170 0.7
cations 104,466 Cable & Wireless PLC 1,338,626 0.3
99,742 Marconi PLC 1,310,528 0.2
594,519 Vodafone AirTouch PLC 2,794,114 0.6
-------------------------
8,722,438 1.8
- --------------------------------------------------------------------------------------------------
Transportation-- 85,468 The Peninsular and Oriental Steam
Shipping Navigation Company 1,253,002 0.3
- --------------------------------------------------------------------------------------------------
Utilities-- 247,549 BG PLC 1,298,390 0.3
Electric & Gas
- --------------------------------------------------------------------------------------------------
Total Investments in the
United Kingdom 39,189,921 8.2
- --------------------------------------------------------------------------------------------------
Total Investments in Europe
(Cost--$179,785,744) 178,613,203 37.1
- --------------------------------------------------------------------------------------------------
NORTH AMERICA
==================================================================================================
Canada
Foreign Canadian Government Bonds:
Government C$6,300,000 7.25% due 6/01/2007 4,555,429 0.9
Obligations C$4,250,000 5.50% due 6/01/2009 2,762,442 0.6
-------------------------
7,317,871 1.5
- --------------------------------------------------------------------------------------------------
Telecommunications 34,700 Nortel Networks Corporation 2,567,800 0.6
- --------------------------------------------------------------------------------------------------
Total Investments in Canada 9,885,671 2.1
- --------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 22 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-----------------------
Shares Percent of
Industries Held Investments Value Net Assets
- --------------------------------------------------------------------------------------------------
NORTH AMERICA (continued)
==================================================================================================
<S> <C> <C> <C> <C>
United States
Aerospace & 54,700 The Boeing Company $ 2,232,444 0.5%
Military 63,100 United Technologies Corporation 3,565,150 0.7
Technology -----------------------
5,797,594 1.2
- --------------------------------------------------------------------------------------------------
Automobiles 32,800 Ford Motor Company 1,656,400 0.4
13,706 Safra Republic Holdings, SA 945,714 0.2
-----------------------
2,602,114 0.6
- --------------------------------------------------------------------------------------------------
Banking 57,100 Bank of America Corporation 3,340,350 0.7
57,100 FleetBoston Financial Corporation 2,159,094 0.4
8,500 + Mellon Bank Corporation 309,719 0.1
86,600 Mellon Financial Corporation 3,155,488 0.7
59,500 U.S. Bancorp 2,034,156 0.4
-----------------------
10,998,807 2.3
- --------------------------------------------------------------------------------------------------
Beverages & Tobacco 98,200 PepsiCo, Inc. 3,394,038 0.7
- --------------------------------------------------------------------------------------------------
Business/ 58,300 + Microsoft Corporation 5,305,300 1.1
Public Services 13,500 + Yahoo! Inc. 2,873,813 0.6
-----------------------
8,179,113 1.7
- --------------------------------------------------------------------------------------------------
Data Processing & 70,200 + Cisco Systems, Inc. 6,256,575 1.3
Reproduction 21,900 + Citrix Systems, Inc. 2,081,869 0.4
22,600 + EMC Corporation 1,888,512 0.4
5,300 + VeriSign, Inc. 984,475 0.2
-----------------------
11,211,431 2.3
- --------------------------------------------------------------------------------------------------
Electrical & 76,300 General Electric Company 9,919,000 2.1
Electronics
- --------------------------------------------------------------------------------------------------
Electronic 71,800 + America Online, Inc. 5,218,962 1.1
Components/ 25,200 + Dell Computer Corporation 1,083,600 0.2
Instruments 22,600 Intel Corporation 1,731,725 0.3
19,000 + JDS Uniphase Corporation 4,345,062 0.9
32,100 + Nextel Communications, Inc. (Class A) 3,181,913 0.7
38,900 Texas Instruments Incorporated 3,736,831 0.8
-----------------------
19,298,093 4.0
- --------------------------------------------------------------------------------------------------
Energy Equipment & 43,100 Halliburton Company 1,667,431 0.3
Service
- --------------------------------------------------------------------------------------------------
Energy Sources 22,600 Chevron Corporation 2,001,512 0.4
35,800 + Exxon Mobil Corporation 2,839,387 0.6
44,700 Mobil Corporation 4,662,769 1.0
39,400 Texaco Inc. 2,400,938 0.5
-----------------------
11,904,606 2.5
- --------------------------------------------------------------------------------------------------
Financial Services 36,400 American Express Company 5,507,775 1.1
76,750 Citigroup Inc. 4,134,906 0.9
-----------------------
9,642,681 2.0
- --------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 23 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------
Shares Held/ Percent of
Industries Face Amount Investments Value Net Assets
- --------------------------------------------------------------------------------------------------
NORTH AMERICA (concluded)
==================================================================================================
<S> <C> <C> <C> <C>
United States (concluded)
Food & Household 60,000 The Dial Corporation $ 1,683,750 0.4%
Products 41,400 The Procter & Gamble Company 4,471,200 0.9
----------------------
6,154,950 1.3
- --------------------------------------------------------------------------------------------------
Forest Products & 32,200 Weyerhaeuser Company 1,972,250 0.4
Paper
- --------------------------------------------------------------------------------------------------
Health & Personal 59,900 Bristol-Myers Squibb Company 4,376,444 0.9
Care 34,200 The Estee Lauder Companies Inc.
(Class A) 1,442,813 0.3
44,600 Johnson & Johnson 4,627,250 1.0
20,000 Merck & Co., Inc. 1,570,000 0.3
39,500 Pfizer Inc. 1,429,406 0.3
53,900 Tyco International Ltd. 2,159,369 0.4
56,900 Warner-Lambert Company 5,103,219 1.1
----------------------
20,708,501 4.3
- --------------------------------------------------------------------------------------------------
Insurance 36,800 American International Group, Inc. 3,799,600 0.8
- --------------------------------------------------------------------------------------------------
Merchandising 43,600 The Home Depot, Inc. 3,447,125 0.7
29,800 + Kohl's Corporation 2,151,187 0.4
126,200 + The Kroger Co. 2,689,638 0.6
56,200 Wal-Mart Stores, Inc. 3,238,525 0.7
101,700 Walgreen Co. 2,962,013 0.6
----------------------
14,488,488 3.0
- --------------------------------------------------------------------------------------------------
Telecommunications 80,200 AT&T Corp. 4,481,175 0.9
75,400 Bell Atlantic Corporation 4,773,762 1.0
36,100 + MCI WorldCom Inc. 2,985,019 0.6
46,200 SBC Communications Inc. 2,399,513 0.5
51,400 Sprint Corp. (FON Group) 3,565,875 0.7
29,000 + Sprint Corp. (PCS Group) 2,660,750 0.6
----------------------
20,866,094 4.3
- --------------------------------------------------------------------------------------------------
US Government US$ 7,700,000 Federal Home Loan Mortgage
Agency Corporation, 5% due 1/15/2004 7,263,256 1.5
Obligations Federal National Mortgage Association:
(Y) 660,000,000 2.125% due 10/09/2007 6,676,818 1.4
US$ 8,000,000 5.25% due 1/15/2009 7,170,000 1.5
----------------------
21,110,074 4.4
- --------------------------------------------------------------------------------------------------
US Government US Treasury Bonds:
Obligations US$ 2,450,000 11.75% due 11/15/2014 3,372,204 0.7
US$ 1,620,000 8% due 11/15/2021 1,881,727 0.4
US$ 3,440,000 6.125% due 8/15/2029 3,367,450 0.7
----------------------
8,621,381 1.8
- --------------------------------------------------------------------------------------------------
Total Investments in the United States 192,336,246 40.0
- --------------------------------------------------------------------------------------------------
Total Investments in North America
(Cost--$187,139,341) 202,221,917 42.1
- --------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 24 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-----------------------
Shares Held/ Percent of
Industries Face Amount Investments Value Net Assets
- --------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA
==================================================================================================
<S> <C> <C> <C> <C>
Australia
Banking 89,000 Colonial Limited $ 354,795 0.1%
29,000 Commonwealth Bank of Australia 478,287 0.1
-----------------------
833,082 0.2
- --------------------------------------------------------------------------------------------------
Business/Public 11,000 Brambles Industries Limited 301,754 0.1
Services
- --------------------------------------------------------------------------------------------------
Electrical & 79,000 Telstra Corporation Limited 460,090 0.1
Electronics
- --------------------------------------------------------------------------------------------------
Foreign A$ 6,100,000 Australian Government Bonds, 7.50%
Government due 7/15/2005 4,065,364 0.8
Obligations
- --------------------------------------------------------------------------------------------------
Forest Products 61,000 Amcor Limited 264,816 0.1
& Paper
- --------------------------------------------------------------------------------------------------
Merchandising 44,000 Coles Myer Limited 223,802 0.0
- --------------------------------------------------------------------------------------------------
Metals/Non-Ferrous 46,000 Rio Tinto Limited 805,749 0.2
- --------------------------------------------------------------------------------------------------
Recreation & Other 29,000 TABCORP Holdings Limited 197,989 0.0
Consumer Goods
- --------------------------------------------------------------------------------------------------
Total Investments in Australia 7,152,646 1.5
- --------------------------------------------------------------------------------------------------
Hong Kong
Industrial-- 74,000 Hutchison Whampoa Limited 912,386 0.2
Components
- --------------------------------------------------------------------------------------------------
Transportation-- 309,000 Cathay Pacific Airways 588,882 0.1
Airlines
- --------------------------------------------------------------------------------------------------
Utilities-- 418,000 Hong Kong and China Gas
Electric & Gas Company Ltd. 543,633 0.1
- --------------------------------------------------------------------------------------------------
Total Investments in Hong Kong 2,044,901 0.4
- --------------------------------------------------------------------------------------------------
Japan
Appliances & 23,800 Sony Corporation 4,401,801 0.9
Household
Durables
- --------------------------------------------------------------------------------------------------
Automobiles 77,000 Toyota Motor Corporation 2,607,104 0.5
- --------------------------------------------------------------------------------------------------
Banking (Yen) 585,000,000 International Bank Reconstruction &
Development, 2% due 2/18/2008 5,879,768 1.2
(Yen)1,033,000,000 KFW International Finance, 2.05%
due 9/21/2009 10,200,266 2.1
145,000 The Sumitomo Bank, Ltd. 2,220,618 0.5
223,000 The Tokai Bank Ltd. 1,542,822 0.3
-----------------------
19,843,474 4.1
- --------------------------------------------------------------------------------------------------
Chemicals 328,000 Asahi Chemical Industry Co., Ltd. 1,784,597 0.4
- --------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 25 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
---------------------
Shares Held/ Percent of
Industries Face Amount Investments Value Net Assets
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (concluded)
==================================================================================================
Japan (concluded)
Data Processing & 91,000 Fujitsu Limited $ 3,223,603 0.7%
Reproduction
- --------------------------------------------------------------------------------------------------
Electrical & 128 NTT Data Corporation 3,118,896 0.7
Electronics
- --------------------------------------------------------------------------------------------------
Electronic 6,000 Fujitsu Support and Service Inc. (FSAS) 2,524,709 0.5
Components/ 22,000 Murata Manufacturing Co., Ltd. 3,642,626 0.8
Instruments ---------------------
6,167,335 1.3
- --------------------------------------------------------------------------------------------------
Financial Services 168,000 The Nomura Securities Co., Ltd. 2,992,074 0.6
- --------------------------------------------------------------------------------------------------
Health & Personal 41,000 Takeda Chemical Industries, Ltd. 2,415,305 0.5
Care
- --------------------------------------------------------------------------------------------------
Industrial-- 80,000 Bridgestone Corp. 1,972,796 0.4
Components 199,000 NSK Limited 1,692,250 0.4
---------------------
3,665,046 0.8
- --------------------------------------------------------------------------------------------------
Machinery & 31,000 Komori Corporation 608,230 0.1
Engineering 437,000 Sumitomo Heavy Industries, Ltd. 1,291,457 0.3
---------------------
1,899,687 0.4
- --------------------------------------------------------------------------------------------------
Metals/Non-Ferrous 529,000 Mitsubishi Materials Corporation 1,138,859 0.2
- --------------------------------------------------------------------------------------------------
Metals--Steel 998,000 Nippon Steel Corporation 2,246,208 0.5
- --------------------------------------------------------------------------------------------------
Real Estate 233,000 Mitsubishi Estate Company, Limited 2,508,073 0.5
- --------------------------------------------------------------------------------------------------
Telecommuni- 160 NTT Mobile Communications
cations Network, Inc. 5,605,245 1.2
267 Nippon Telegraph & Telephone
Corporation (NTT) 4,781,388 1.0
---------------------
10,386,633 2.2
- --------------------------------------------------------------------------------------------------
Textiles & Apparel 16,000 World Co., Ltd. 2,115,275 0.4
- --------------------------------------------------------------------------------------------------
Transportation-- 253 East Japan Railway Company 1,485,468 0.3
Road & Rail
- --------------------------------------------------------------------------------------------------
Total Investments in Japan 71,999,438 15.0
- --------------------------------------------------------------------------------------------------
Singapore
Broadcasting & 28,000 Singapore Press Holdings Ltd. 524,750 0.1
Publishing
- --------------------------------------------------------------------------------------------------
Transportation-- 29,000 Singapore Airlines Limited 293,313 0.1
Airlines
- --------------------------------------------------------------------------------------------------
Total Investments in Singapore 818,063 0.2
- --------------------------------------------------------------------------------------------------
Total Investments in the Pacific
Basin/Asia (Cost--$61,964,448) 82,015,048 17.1
- --------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 26 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONCLUDED)
<TABLE>
<CAPTION>
In US Dollars
------------------------
Face Short-Term Percent of
Amount Securities Value Net Assets
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
US Govern- US Treasury Bills:
ment US$4,800,000 4.45% due 12/02/1999 $ 4,799,396 1.0%
Obligations* 5,030,000 5.22% due 1/20/2000 4,994,846 1.0
- ----------------------------------------------------------------------------------------------------
Total Investments in
Short-Term Securities
(Cost--$9,794,242) 9,794,242 2.0
========================
- ----------------------------------------------------------------------------------------------------
Total Investments
(Cost--$438,683,775) 472,644,410 98.3
Liabilities in Excess of Other Assets (12,352,521) (2.6)
Unrealized Appreciation on
Forward Foreign Exchange
Contracts*** 4,315,227 0.9
Time Deposits** 16,145,000 3.4
------------------------
Net Assets $480,752,116 100.0%
========================
- ----------------------------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
* Certain US Government Obligations are traded on a discount basis; the
interest rates shown reflect the discount rates paid at the time of
purchase by the Fund.
** Time deposit bears interest at 5.687% and matures on 12/01/1999.
*** Forward foreign exchange contracts as of November 30, 1999 were as
follows:
- --------------------------------------------------------------------------------
Foreign Expiration Unrealized
Currency Purchased Date Depreciation
- --------------------------------------------------------------------------------
(pound) 100,000 January 2000 $ (429)
- --------------------------------------------------------------------------------
(US$ Commitment--$159,700) $ (429)
----------
- --------------------------------------------------------------------------------
Unrealized
Foreign Expiration Appreciation
Currency Sold Date (Depreciation)
- --------------------------------------------------------------------------------
A$ 6,170,000 January 2000 $ 115,502
C$ 10,900,000 January 2000 1,225
Dkr 39,000,000 January 2000 331,024
(euro) 66,550,000 January 2000 4,257,203
(pound) 3,170,000 January 2000 205,226
(Yen)2,282,000,000 January 2000 (594,524)
- --------------------------------------------------------------------------------
(US$ Commitment--$115,721,229) $4,315,656
----------
- --------------------------------------------------------------------------------
Total Unrealized Appreciation on
Forward Foreign Exchange
Contracts--Net $4,315,227
==========
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
November 30, 1999 27 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of November 30, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
<TABLE>
<S> <C> <C>
Assets:
Investments, at value (identified cost--$438,683,775) $472,644,410
Unrealized appreciation on forward foreign exchange contracts 4,315,227
Cash 690
Time deposits 16,145,000
Receivables:
Securities sold $ 8,467,253
Interest 2,427,766
Dividends 393,597
Contributions 325,279
Forward foreign exchange contracts 33,724 11,647,619
-----------
Prepaid expenses 40,661
------------
Total assets 504,793,607
------------
- --------------------------------------------------------------------------------------------
Liabilities:
Payables:
Securities purchased 22,191,443
Custodian bank 1,048,979
Withdrawals 636,000
Investment adviser 32,104
Forward foreign exchange contracts 12,122 23,920,648
-----------
Accrued expenses and other liabilities 120,843
------------
Total liabilities 24,041,491
------------
- --------------------------------------------------------------------------------------------
Net Assets:
Net assets $480,752,116
============
- --------------------------------------------------------------------------------------------
Net Assets Consist of:
Partners' capital $442,565,362
Unrealized appreciation on investments and foreign
currency transactions--net 38,186,754
------------
Net assets $480,752,116
============
- --------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
November 30, 1999 28 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Period April 30, 1999+ to November 30, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Interest and discount earned (net of $5,674 foreign withholding tax) $ 5,416,657
Dividends (net of $173,574 foreign withholding tax) 1,949,254
-----------
Total income 7,365,911
-----------
- ----------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees $ 1,578,240
Custodian fees 149,905
Accounting services 63,586
Trustees' fees and expenses 23,859
Professional fees 18,724
Offering costs 6,825
Pricing fees 849
Other 4,323
------------
Total expenses 1,846,311
-----------
Investment income--net 5,519,600
-----------
- ----------------------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) on Investments
& Foreign Currency Transactions--Net:
Realized loss from:
Investments--net (5,980,210)
Foreign currency transactions--net (512,975) (6,493,185)
------------
Unrealized appreciation on:
Investments--net 33,960,635
Foreign currency transactions--net 4,226,119 38,186,754
----------------------------
Net realized and unrealized gain on investments and foreign
currency transactions 31,693,569
-----------
Net Increase in Net Assets Resulting from Operations $37,213,169
===========
- ----------------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
November 30, 1999 29 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS
For the Period April 30, 1999+ to November 30, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
Increase (Decrease) in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Operations
Investment income--net $ 5,519,600
Realized loss on investments and foreign currency transactions--net (6,493,185)
Unrealized appreciation on investments and foreign currency transactions--net 38,186,754
-------------
Net increase in net assets resulting from operations 37,213,169
-------------
- ----------------------------------------------------------------------------------------------
Net Capital Contributions:
Increase in net assets derived from net capital contributions 443,438,847
-------------
- ----------------------------------------------------------------------------------------------
Net Assets:
Total increase in net assets 480,652,016
Beginning of period 100,100
-------------
End of period $ 480,752,116
=============
- ----------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
November 30, 1999 30 Mercury Global Balanced Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
The following ratios have been derived from information
provided in the financial statements. For the Period
April 30, 1999+
to Nov. 30, 1999
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .70%*
===========
Investment income--net 2.10%*
===========
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 480,752
===========
Portfolio turnover 71.04%
===========
- --------------------------------------------------------------------------------
* Annualized.
+ Commencement of operations.
See Notes to Financial Statements.
November 30, 1999 31 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
1 Significant Accounting Policies:
Mercury Master Global Balanced Portfolio (the "Portfolio") is part of
Mercury Asset Management Master Trust (the "Trust"). The Trust is
registered under the Investment Company Act of 1940 and is organized as a
Delaware business trust. The Portfolio's financial statements are prepared
in accordance with generally accepted accounting principles, which may
require the use of management accruals and estimates. The following is a
summary of significant accounting policies followed by the Portfolio.
(a) Valuation of investments--Portfolio securities that are traded on
stock exchanges are valued at the last sale price as of the close of
business on the day the securities are being valued or, lacking any sales,
at the last available bid price for long positions and the last available
ask price for short positions. Securities traded in the over-the-counter
market are valued at the last available bid price prior to the time of
valuation. Securities traded both in the over-the-counter market and on a
stock exchange are valued according to the broadest and most
representative market. Short positions in securities traded in the
over-the-counter market are valued at the last available ask price prior
to the time of valuation. Options written or purchased are valued at the
last sale price in the case of exchange-traded options. In the case of
options traded in the over-the-counter market, valuation is the last asked
price (options written) or the last bid price (options purchased).
Short-term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and related
options, are stated at market value. Securities and assets for which
market quotations are not readily available are valued at fair market
value, as determined in good faith by or under the direction of the
Trust's Board of Trustees.
(b) Derivative financial instruments--The Portfolio may engage in various
portfolio investment strategies to seek to increase its return by hedging
its holdings against adverse movements in the equity, debt and currency
markets. Losses may arise due to changes in the value of the contract or
if the counterparty does not perform under the contract.
o Financial futures contracts--The Portfolio may purchase or sell
financial futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the intended
purchase of securities. Upon entering into a contract, the Portfolio
deposits and maintains as collateral such initial margin as required by
the exchange on which the transaction is effected. Pursuant to the
contract, the Portfolio agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the contract.
Such receipts or payments are known as variation margin and are recorded
by the Portfolio as unrealized gains or losses. When the contract is
closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed.
November 30, 1999 32 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
o Options--The Portfolio is authorized to purchase and write call and put
options. When the Portfolio writes an option, an amount equal to the
premium received by the Portfolio is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently marked
to market to reflect the current market value of the option written. When
a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the
basis of the security acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the Portfolio enters into
a closing transaction), the Portfolio realizes a gain or loss on the
option to the extent of the premiums received or paid (or a gain or loss
to the extent that the cost of the closing transaction exceeds the premium
paid or received).
Written and purchased options are non-income producing investments.
o Forward foreign exchange contracts--The Portfolio is authorized to enter
into forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. Such contracts are not entered on the
Portfolio's records. However, the effect on operations is recorded from
the date the Portfolio enters into such contracts.
o Foreign currency options and futures--The Portfolio may also purchase or
sell listed or over-the-counter foreign currency options, foreign currency
futures and related options on foreign currency futures as a short or long
hedge against possible variations in foreign exchange rates. Such
transactions may be effected with respect to hedges on non-US
dollar-denominated securities owned by the Portfolio, sold by the
Portfolio but not yet delivered, or committed or anticipated to be
purchased by the Portfolio.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized.
Assets and liabilities denominated in foreign currencies are valued at the
exchange rate at the end of the period. Foreign currency transactions are
the result of settling (realized) or valuing (unrealized) assets or
liabilities expressed in foreign currencies into US dollars. Realized and
unrealized gains or losses from investments include the effects of foreign
exchange rates on investments.
(d) Income taxes--The Portfolio is classified as a partnership for Federal
income tax purposes. As a partnership for Federal income tax purposes, the
Portfolio will not incur Federal income tax liability. Items of
partnership income, gain, loss and deduction will pass through to
investors as partners in the portfolio. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, withholding
taxes may be imposed on interest, dividends, and capital gains at various
rates.
November 30, 1999 33 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(e) Security transactions and investment income--Security transactions are
accounted for on the date the securities are purchased or sold (the trade
dates). Dividend income is recorded on the ex-dividend dates. Dividends
from foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Portfolio has determined the ex-dividend
date. Interest income (including amortization of discount) is recognized
on the accrual basis. Realized gains and losses on security transactions
are determined on the identified cost basis.
(f) Custodian bank--The Portfolio recorded an amount payable to the
custodian bank reflecting an overdraft that resulted from a timing
difference of security transaction settlements.
2 Investment Advisory Agreement and Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Mercury
Asset Management International Ltd. ("Mercury International"), an
affiliate of Fund Asset Management, L.P. ("FAM"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited
partner.
Mercury International is responsible for the management of the Portfolio's
investments and provides the necessary personnel, facilities, equipment
and certain other services necessary to the operations of the Portfolio.
For such services, the Portfolio pays a monthly fee at an annual rate of
.60% of the average daily value of the Portfolio's net assets. The Trust
has entered into a Sub-Advisory Agreement with FAM with respect to the
Portfolio, pursuant to which FAM provides investment advisory services
with respect to the Portfolio's daily cash assets. Mercury International
has agreed to pay FAM a fee in an amount to be determined from time to
time by both parties but in no event in excess of the amount that Mercury
International actually receives for providing services to the Trust
pursuant to the Investment Advisory Agreement.
For the period April 30, 1999 to November 30, 1999, the Portfolio paid
Merrill Lynch Security Pricing Service, an affiliate of MLPF&S, $119 for
security price quotations to compute the net asset value of the Fund.
In addition, MLPF&S received $7,597 in commissions on the execution of
portfolio security transactions for the Portfolio for the period April 30,
1999 to November 30, 1999.
Accounting services are provided to the Portfolio by FAM at cost.
Certain officers and/or trustees of the Trust are officers and/or
directors of Mercury Asset Management Funds, Inc., Mercury International,
FAM, PSI, and/or ML & Co.
November 30, 1999 34 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
3 Investments:
Purchases and sales of investments, excluding short-term securities, for
the period April 30, 1999 to November 30, 1999 were $700,246,672 and
$264,523,678, respectively.
Net realized gains (losses) for the period April 30, 1999 to November 30,
1999 and net unrealized gains (losses) as of November 30, 1999 were as
follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
--------------------------------------------------------------------------
Investments:
Long-term $ (5,981,956) $ 33,960,635
Short-term 1,746 --
-------------------------------
Total investments (5,980,210) 33,960,635
-------------------------------
Currency transactions:
Forward foreign exchange contract (134,631) 4,315,227
Foreign currency transactions (378,344) (89,108)
-------------------------------
Total currency transactions (512,975) 4,226,119
-------------------------------
Total $ (6,493,185) $ 38,186,754
===============================
--------------------------------------------------------------------------
As of November 30, 1999, net unrealized appreciation for Federal income
tax purposes aggregated $32,105,178, of which $50,464,211 related to
appreciated securities and $18,359,033 related to depreciated securities.
At November 30, 1999, the aggregate cost of investments for Federal income
tax purposes was $440,539,232.
4 Commitments:
At November 30, 1999, the Portfolio had entered into foreign exchange
contracts, in addition to the contracts listed in the Schedule of
Investments, under which it had agreed to purchase and sell various
foreign currencies with approximate values of $2,763,000 and $6,405,000,
respectively.
5 Capital Loss Carryforward:
At November 30, 1999, the Portfolio had a net capital loss carryforward of
approximately $4,188,000, all of which expires in 2007. This amount will
be available to offset like amounts of any future taxable gains.
November 30, 1999 35 Mercury Global Balanced Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
The Board of Trustees and Shareholders,
Mercury Master Global Balanced Portfolio (One of the Series constituting
Mercury Asset Management Master Trust):
We have audited the accompanying statement of assets and liabilities of Mercury
Master Global Balanced Portfolio, including the schedule of investments, as of
November 30, 1999, the related statements of operations and changes in net
assets, and the financial highlights for the period April 30, 1999 (commencement
of operations) to November 30, 1999. These financial statements and financial
highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the financial highlights
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at November 30, 1999 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Mercury Master
Global Balanced Portfolio as of November 30, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
period April 30, 1999 (commencement of operations) to November 30, 1999 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 18, 2000
November 30, 1999 36 Mercury Global Balanced Fund
<PAGE>
PORTFOLIO INFORMATION
WORLDWIDE INVESTMENTS AS OF NOVEMBER 30, 1999 (unaudited)
================================================================================
Ten Largest Percent of
Equity Holdings Net Assets
- --------------------------------------------------------------------------------
Mannesmann AG 2.1%
- --------------------------------------------------------------------------------
General Electric Company 2.1
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 1.3
- --------------------------------------------------------------------------------
NTT Mobile Communications
Network, Inc. 1.2
- --------------------------------------------------------------------------------
American Express Company 1.1
- --------------------------------------------------------------------------------
Nokia Oyj 1.1
- --------------------------------------------------------------------------------
Microsoft Corporation 1.1
- --------------------------------------------------------------------------------
Warner-Lambert Company 1.1
- --------------------------------------------------------------------------------
America Online, Inc. 1.1
- --------------------------------------------------------------------------------
Nippon Telegraph & Telephone
Corporation (NTT) 1.0
- --------------------------------------------------------------------------------
Ten Largest Industries Percent of
(Equity Investments) Net Assets
- --------------------------------------------------------------------------------
Telecommunications 11.5%
- --------------------------------------------------------------------------------
Banking 10.0
- --------------------------------------------------------------------------------
Health & Personal Care 6.6
- --------------------------------------------------------------------------------
Electronic Components/Instruments 5.3
- --------------------------------------------------------------------------------
Electrical & Electronics 5.0
- --------------------------------------------------------------------------------
Merchandising 4.4
- --------------------------------------------------------------------------------
Energy Sources 4.2
- --------------------------------------------------------------------------------
Data Processing & Reproduction 3.0
- --------------------------------------------------------------------------------
Financial Services 2.6
- --------------------------------------------------------------------------------
Insurance 2.5
- --------------------------------------------------------------------------------
November 30, 1999 37 Mercury Global Balanced Fund
<PAGE>
PORTFOLIO INFORMATION (CONCLUDED)
WORLDWIDE INVESTMENTS AS OF NOVEMBER 30, 1999 (unaudited)
================================================================================
Ten Largest Percent of
Fixed-Income Holdings Net Assets
- --------------------------------------------------------------------------------
Bundesrepublic Deutschland,
6.875% due 5/12/2005 2.7%
- --------------------------------------------------------------------------------
Bundesobligation, 5% due
8/20/2001 2.2
- --------------------------------------------------------------------------------
French Btan, 4.50% due 7/12/2002 2.2
- --------------------------------------------------------------------------------
KFW International Finance,
2.05% due 9/21/2009 2.1
- --------------------------------------------------------------------------------
Bundesobligation, 3.25% due
2/17/2004 1.6
- --------------------------------------------------------------------------------
Bonos Y Obligation Del Estado,
4.50% due 7/30/2004 1.5
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage
Corporation, 5% due 1/15/2004 1.5
- --------------------------------------------------------------------------------
Federal National Mortgage
Association, 5.25% due 1/15/2009 1.5
- --------------------------------------------------------------------------------
Federal National Mortgage
Association, 2.125% due
10/09/2007 1.4
- --------------------------------------------------------------------------------
International Bank Reconstruction &
Development, 2% due 2/18/2008 1.2
- --------------------------------------------------------------------------------
Percent of
Asset Mix Net Assets
- --------------------------------------------------------------------------------
Common Stock 68.1%
- --------------------------------------------------------------------------------
Fixed-Income Securities 28.2
- --------------------------------------------------------------------------------
Cash & Cash Equivalents 3.7
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
November 30, 1999 38 Mercury Global Balanced Fund
<PAGE>
OFFICERS AND DIRECTORS
Jeffrey M. Peek, Director and President
David O. Beim, Director
James T. Flynn, Director
W. Carl Kester, Director
Karen P. Robards, Director
Terry K. Glenn, Director and
Executive Vice President
Peter John Gibbs, Senior Vice President
Donald C. Burke, Vice President and
Treasurer
Robert E. Putney, III, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(888) 763-2260
November 30, 1999 39 Mercury Global Balanced Fund
<PAGE>
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
The Fund seeks long-term capital growth and current income. The Fund will seek
to achieve its objective by investing all of its assets in Mercury Master Global
Balanced Portfolio of Mercury Asset Management Master Trust, which has the same
investment objective as the Fund. The Portfolio is managed in two segments, an
equity segment and a bond segment. The Portfolio invests in a mix of stocks and
high-quality bonds of issuers located in the United States and other developed
countries. The Portfolio's neutral position consists of approximately 60%
invested in stocks and 40% in bonds, although the Portfolio may vary each of
these percentages up to 15% in either direction based on current economic and
market conditions. The Fund's investment experience will correspond to the
investment experience of the Portfolio.
Mercury Global Balanced Fund of
Mercury Asset Management Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
[RECYCLE LOGO] Printed on post-consumer recycled paper MERCBAL--11/99
